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Saturday, 14 October 2017

Whether purchaser is subject to lis pendens even after dismissal of suit?

It was also submitted on behalf of the appellants that the expression insection 52 of the T.P. Act “suit or proceedings” is also applicable to theapplications. An application seeking extension of time is also a proceeding withinthe meaning of the said provision and appeal filed is also continuation of the suit orproceedings but comes within the meaning of the proceedings. The legislativeintent behind the amendment of section 52 was not only to cover the suit but alsoto cover appeals and proceedings and same would include all applications/appealsunder the CPC. An application under Order 9 Rule 9 would also be covered withinthe meaning of the expression suit or other proceedings to which the doctrine of lispendens would apply. It was also submitted that section 52 prior to amendmentprohibited transfer made during the “active prosecution” of a suit. Section 52 of theTransfer of Property Act, embodies the rule of lis pendens, which prior to itsamendment only prohibited a transfer made during the “active prosecution” of asuit or a proceeding in which any right to immoveable property was directly andspecifically in question. The expression “active prosecution”, which existed in thesection before its amendment in 1929, led to much uncertainty in the application ofthe rule, and caused a divergence of judicial opinion. It was felt that the standardof diligence, which would constitute “active prosecution”, could not be definedwith precision. To remove this uncertainty, the law was amended in 1929, and theAmending Act XX of 1929 substituted the word “pendency” for the phrase “activeprosecution”; and there can now be no difficulty in deciding whether the transferwas made during the pendency of a suit or proceeding. In Parmeshari Din v. RamCharan & Ors. AIR 1937 PC 260, it was held :“2. It is clear that the question of the active prosecution of a suit isone of fact, but it was not suggested in either of the Courts in Indiathat the plaintiffs had not actively prosecuted the suit, and wereconsequently debarred from availing themselves of the rule of lispendens. The learned Judges of the Court of Appeal had, therefore, noopportunity to express their opinion on this point; and their Lordshipscannot entertain an objection, which depends upon a question of factnot dealt with below. Upon the record before them, there is noindication of any delay or remissness in the prosecution of the suit, forwhich the plaintiffs can be held responsible. Their Lordships,therefore, agree with the High Court that the transfer relied upon bythe appellant cannot prejudice the rights of the decree-holders, andthat he cannot resist the decree obtained by them.”The abovesaid principle of law settled in the year 1937 by the Privy Councilis still valid as discerned from the latest judgment of this Court rendered in thecase of Kirpal Kaur v. Jitender Pal Singh & Ors. (2015) 9 SCC 356 : “21. The execution of the alleged gift deed by the deceased firstdefendant in favour of the second defendant is also hit bySection 52 of the Transfer of Property Act, 1882, as the said deed wasexecuted during the pendency of the proceedings and before theexpiry of the period of limitation for filing SLP. Further, during thependency of these proceedings, the second defendant, who hasclaimed to be the alleged beneficiary of the suit Schedule “B”property on the basis of alleged gift deed should have sought leave ofthis Court as the donee and brought the aforesaid fact of execution ofthe alleged gift deed in respect of “B” schedule property by thedeceased first defendant, which property has been devolved in hisfavour, to the notice of this Court as provided under Order 22Rule 10 of the CPC and defended his right as required under the lawas laid down by this Court in a catena of cases.x x x x x26. The legality of the alleged gift deed executed in favour of thesecond defendant by the deceased first defendant in respect of theSchedule 'B' property has been further examined by us and the same ishit by Section 52 of the Transfer of Property Act, 1882, in the light ofthe decision of this Court in the case of Jagan Singh v. Dhanwanti(2012) 2 SCC 628, wherein this Court has laid down the legalprinciple that under Section 52 of the Transfer of Property Act, 1882,the 'lis' continues so long as a final decree or order has not beenobtained from the Court and a complete satisfaction thereof has notbeen rendered to the aggrieved party contesting the civil suit. It hasbeen further held by this Court that it would be plainly impossible thatany action or suit could be brought to a successful termination ifalienations pendente lite were permitted to prevail.”wherein the factum of the alleged gift deed was not made known to theCourt. This has been extrapolated in the case of Jagan Singh (dead) through LRs.v. Dhanwanti & Anr. (2012) 2 SCC 628 thus : “32. The broad principle underlying Section 52 of the TP Act is tomaintain the status quo unaffected by the act of any party to thelitigation pending its determination. Even after the dismissal of a suit,a purchaser is subject to lis pendens, if an appeal is afterwards filed,as held in Krishanaji Pandharinath v. Anusayabai AIR (1959) Bom475. In that matter the respondent (original plaintiff) had filed a suitfor maintenance against her husband and claimed a charge on hishouse. The suit was dismissed on 15.7.1952 under Order 9 Rule 2, ofthe Code of Civil Procedure 1908, for non-payment of process fee.The husband sold the house immediately on 17.7.1952. Therespondent applied for restoration on 29.7.1952, and the suit wasrestored leading to a decree for maintenance and a charge wasdeclared on the house. The plaintiff impleaded the appellant to thedarkhast as purchaser. The Appellant resisted the same by contendingthat the sale was affected when the suit was dismissed. Rejecting thecontention the High Court held in para 4 as follows:“..In Section 52 of the Transfer of Property Act, as it stoodbefore it was amended by Act 20 of 1929, the expression‘active prosecution of any suit or proceeding’ was used. Thatexpression has now been omitted, and the Explanation makes itabundantly clear that the 'lis' continues so long as a final decreeor order has not been obtained and complete satisfaction thereofhas not been rendered. At p. 228 in Sir Dinshah Mulla's"Transfer of Property Act", 4th Edn., after referring to severalauthorities, the law is stated thus:“Even after the dismissal of a suit a purchaser issubject to 'lis pendens', if an appeal is afterwards filed.”If after the dismissal of a suit and before an appeal ispresented, the 'lis' continues so as to prevent the defendantfrom transferring the property to the prejudice of the plaintiff, Ifail to see any reason for holding that between the date ofdismissal of the suit under Order 9 Rule 2 of the CivilProcedure Code and the date of its restoration, the 'lis' does notcontinue.”33. It is relevant to note that even when Section 52 of TP Act wasnot so amended, a Division Bench of Allahabad High Court hadfollowing to say in Moti Chand v. British India Corpn. Ltd. AIR(1932) All 210:‘10, ….The provision of law which has been relied uponby the appellants is contained in Section 52, TP Act. The activeprosecution in this section must be deemed to continue so longas the suit is pending in appeal, since the proceedings in theappellate court are merely continuation of those in the suit…’(see Gobind Chunder Roy v. Guru Churn Kurmokar ILR1988 15 Cal. 94).”34. If such a view is not taken, it would plainly be impossible thatany action or suit could be brought to a successful termination ifalienations pendente lite were permitted to prevail. The Explanation tothis section lays down that the pendency of a suit or a proceeding shallbe deemed to continue until the suit or a proceeding is disposed of byfinal decree or order, and complete satisfaction or discharge of suchdecree or order has been obtained or has become unobtainable byreason of the expiration of any period of limitation prescribed for theexecution thereof by any law for the time being in force.35. In the present case, it would be canvassed on behalf of therespondent and the applicant that the sale has taken place in favour ofthe applicant at a time when there was no stay operating against suchsale, and in fact when the second appeal had not been filed. We wouldhowever, prefer to follow the dicta in Krishanaji Pandharinath AIR1959 Bom 475 to cover the present situation under the principle of lispendens since the sale was executed at a time when the second appealhad not been filed but which came to be filed afterwards within thePage 3636period of limitation. The doctrine of lis pendens is founded in publicpolicy and equity, and if it has to be read meaningfully such a sale asin the present case until the period of limitation for second appeal isover will have to be held as covered under Section 52 of the TP Act.”31. The doctrine of lis pendens would be applicable even to the proceedings inthe nature of an appeal as has been emphasized in the case of KrishanajiPandharinath v. Anusayabai AIR 1959 Bom 475 thus :“3. It is true that in this case the sale effected by Sidram was afterthe dismissal of the suit filed by Anusayabai and before the suit wasrestored, but the alienation being before, the final decree or order waspassed and complete satisfaction or discharge of the decree wasobtained, it must be regarded as pendente lite. In s. 52 of the Transferof Property Act, as it stood before it was amended by Act XX of 1929,the expression “active prosecution of any suit or proceeding” wasused. That expression has now been omitted, and the Explanationmakes it abundantly clear that the lis continues so long as a finaldecree or order has not been obtained and complete satisfactionthereof has not been rendered. At page 228 in Sir Dinshah Mulla’s“Transfer of Property Act”, 4th edn., after referring to severalauthorities, the law is stated thus:“... Even after the dismissal of a suit a purchaser is subject to lispendens, if an appeal is afterwards filed.”